What is the Moratorium Period in Health Insurance?

What is Moratorium Period in Health Insurance?

When you buy a health insurance policy, there are certain aspects that need to align with the guidelines of the Insurance Regulatory and Development Authority of India. A moratorium is a legal period, after which an insurance company is not allowed to question the authenticity of a claim. They cannot also deny the claim on account of any non-disclosure or misrepresentation, unless the claim is proved to be a fraud.

The moratorium period in health insurance is decided by the IRDAI. Till a few years ago, it was eight years; However, for newly issued (or renewed) policies on or after 1st April, 2024, the period has been shortened to 5 years (60 months).

How Does the Moratorium Period Work?

Here’s an example to better understand the moratorium period meaning in health insurance. Suppose 29-year-old Meghna Dave bought a health insurance policy in 2021 and kept renewing it without any break. In 2026, she made a claim. Now, even if the insurer later finds that she forgot to mention her diabetes when she bought the policy, they cannot deny the claim unless they can prove it was intentional fraud.

It should be noted that even if Meghna ported her policy to another insurance company, the waiting period she has served so far will be carried forward.

Why is the Moratorium Period Introduced in Health Insurance?

The IRDAI introduced the concept of a moratorium period in health insurance to promote transparency in claim settlement. The idea was simple: if policyholders have maintained their health insurance for 5 years, the insurance company cannot reject their claims because of an undisclosed or neglected pre-existing condition.

This feature, thus, encourages a policyholder to keep renewing their policy regularly, so there’s no break. It ensures longer and stronger coverage.

Why the Moratorium Period Is Important in Health Insurance?

Insurance stands for assurance. It is about faith; faith that in times of need, your insurer will come to your rescue. The moratorium period is like a trust-building mechanism, in which minor discrepancies do not lead to claim rejection. To address the unfairness of denying coverage after years of faithful policy renewal, IRDAI introduced the moratorium clause.

Moratorium Period vs Pre-Existing Disease Waiting Period

While the moratorium clause in health insurance is closely linked to pre-existing illness, it is not the same as a waiting period. The table below explains the differences between the moratorium period and the waiting period.

Key Points to Remember to Benefit from the Moratorium Period

The moratorium period is indeed a beneficial feature for policyholders; however, there are certain aspects that you need to keep in mind:

1. When you buy a health insurance policy, be extremely cautious and share all your medical details with the insurance provider. Do not hide or miscommunicate any detail, even if you think it is a minor one.
2. If you are not too sure about any hidden medical issues, it is recommended that you get a detailed health check-up done. This way, even if there’s an undiscovered illness, you will get to know about it.
3. As a policyholder, you need to make sure you renew your health insurance before it expires. While insurers give you a grace period of 15 to 30 days once your policy expires, avoid missing the dates, as a claim made in the grace period can be rejected.
4. Also, as far as possible, keep your policy papers, medical reports, bills, and receipts, if any, safe and handy.

In Conclusion

Whenever you buy a health insurance policy, it is important that you understand the key aspects. Clarity on these can help you get the coverage when you need it the most. While it is essential to know the coverage, inclusions, and exclusions, understanding the moratorium period is equally crucial.

The 5-year moratorium period is a great feature. But at the same time, you need to understand that just because an insurer cannot reject your claim, you should not hide or miscommunicate your medical issues from the insurance company. Choose a comprehensive policy, understand the coverage, disclose all details, and pay your premiums regularly to enjoy the features confidently.

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